Patent exhaustion (along with the concept of an implied license) was HTC's seventh affirmative defense and Google's twelfth affirmative defense. Google's response to Nokia's complaint didn't elaborate on this. HTC claimed that Nokia had license agreements in place with Microsoft as well as chipset makers Broadcom and Qualcomm that prevent its assertion of some or all of the patents-in-suit against those companies' downstream customers such as HTC. This is the full text of the affirmative defense by HTC that Administrative Law Judge (ALJ) Thomas B. Pender has thrown out:

"11. Nokia's claims are barred in whole or in part by the doctrines of patent exhaustion and/or implied license.

12. On July 2, 2001 Nokia concluded a 'Subscriber Unit License Agreement' with Qualcomm, lnc. ('the 2001 Nokia-Qualcomm Agreement'). Among other commitments between the parties in the 2001 Nokia-Qualcomm Agreement, Nokia covenanted not to assert any of its own patents against Qualcomm. The 2001 Nokia-Qualcomm Agreement covered all of Nokia's patents, including both essential and non-essential patents.

13. On July 22, 2008 Nokia entered into an agreement with Qualcomm (the '2008 Nokia-Qualcomm Agreement'). On information and belief, the 2008 Nokia-Qualcomm Agreement granted Qualcomm a patent license or covenant not to assert any of its patents against Qualcomm, thus permitting Qualcomrn to incorporate Nokia’s patents into Qualcomm's chipset products sold to third parties.

14. On information and belief, no provision of either the 2001 Nokia-Qualcomm Agreement or the 2008 Nokia-Qualcomm Agreement purports to limit or condition Qualcomm's authority to sell chipset products embodying Nokia's patents. l5. On information and belief, certain Qualcomm chipset products embody the essential features of Nokia‘s patents. These products include 2G, 3G, and 4G chipsets that Qualcomm sold to HTC.

l6. Qualcomm's authorized sale of chipset products substantially embodying Nokia's patents to HTC took these products outside of the scope of Nokia's patent monopoly and as a result Nokia can no longer assert any patent rights against HTC for products that include chipsets it purchased from Qualcomm.

l7. On information and belief, Nokia has concluded similar agreements with other suppliers, such as Broadcom Corp. and Texas Instruments, lnc., that grant those suppliers licenses andfor covenants not to assert any of Nokia's patents for infringement. The authorized sale of products embodying Nokia's patents to HTC by these suppliers took those products outside of the scope of Nokia's patent monopoly and as a result Nokia can no longer assert its patent rights, including demands for royalties, against HTC.

18. Additionally, on information and belief, Nokia entered into an agreement with Microsoft Corporation that granted Microsoft a license and/or covenant not to assert any of Nokia's patents for infringement. The authorized sale of products, including the Windows Mobile platform. to HTC by Microsoft took those products outside the scope of Nokia's patent monopoly and as a result Nokia can no longer assert its patent rights, including demands for royalties, against HTC for any products incorporating the Windows Mobile platform or any other products subject to a license or otherwise covered by the agreement with Microsoft.

19. Based on the foregoing. Nokia's patent rights have been exhausted with respect to at least some of the accused products. Additionally, on information and belief, Nokia's prior patent license agreements granted an implied license to HTC for the accused products."

Google and HTC can appeal Judge Pender's order by asking the Commission, the six-member decision-making body at the top of the U.S. trade agency, for a review. I doubt that this would change the outcome. Its patent exhaustion (and related) theories in Germany also failed to get any traction with the courts there.

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About Me

Florian Mueller is an app developer who used to be an award-winning intellectual property activist. His 30 years of software industry expertise span different market segments (games, education, productivity and infrastructure software), diverse business models, and technical and commercial areas of responsibility. In recent years, Florian advised a diversity of clients on the patent wars surrounding mobile devices, and on their economic and technical implications. (In order to avoid conflicts of interest, Florian does not hold or initiate transactions in any technology stocks or derivatives thereof, except that he is long AAPL.) He is now developing games for smartphones and tablet computers.